Tags: NCR | growth | heavyweight | rivals

NCR Seeks Growth Despite Heavyweight Rivals

By    |   Thursday, 16 February 2012 08:39 AM

NCR (NCR) is a leading international manufacturer of automated teller machines and other transaction-processing hardware, albeit one with plenty of heavyweight rivals.

NCR seeks growth from not only ATMs, point-of-sale terminals and other products, but also software and services that help banks, retailers and other types of companies do business with their customers.

NCR provides transaction-processing technology to businesses in financial services, retailing, hospitality, healthcare, travel, gaming and entertainment.

The Duluth, Ga., company gets most of its revenue in North America and Europe. It also operates in Brazil, China, India, Japan and South Korea and in regions such as the Middle East and South Asia Pacific.

NCR faces considerable competition in the industries it serves, including ATM maker Diebold (DBD), among other rivals in financial services.

Rivals in retailing and hospitality include Hewlett Packard (HPQ) and International Business Machines (IBM). NCR also competes with IBM in the travel, gaming and entertainment industries.

The NCR product line has grown to include self-service kiosks that allow consumers to check themselves onto airline flights or into hotels. The company also sells software that consumers can use to interact with businesses from personal computers and mobile phones. NCR's services include installation, maintenance, support and management of its products.

NCR got about half of its revenue from services and about half from products in the last two years, but profit margins went in different directions. Gross profit margins fell to 19.4 percent for products, down from 19.8 percent in 2010, while rising to 22.2 percent for services, up from 20.2 percent.

Annual revenue topped $5 billion last year for the first time since 2008. But earnings per diluted share tumbled to 33 cents last year after totaling 83 cents in 2010, which was a turnaround from the company's net loss of 21 cents per diluted share in 2009.

NCR management this year expects annual revenue growth of 7 percent to 9 percent and diluted earnings per share in the range of $1.47 to $1.57.

Wall Street on balance recommends either owning or accumulating shares of the company. The number of stock analysts with buy ratings on NCR in early February was about equal to those with hold ratings.

Enhanced growth

Gil Luria and Jonathan Jin, stock analysts at Wedbush Securities, reiterated their buy rating on NCR this month. Luria and Jin said NCR will gain from its August 2011 acquisition of Radiant Systems, an Atlanta, Ga. provider of software programming and services for retailing and hospitality businesses and from the pending sale of an entertainment business based on DVDs.

"We believe NCR remains poised to exceed expectations as its growth in the core ATM business continues into 2012, further enhanced by the integration of Radiant and disposition of the DVD business," the Wedbush analysts write in their Feb. 6 research note on the company.

NCR reported a $9 million net loss for the fourth quarter of 2011, compared with net income of $39 million in the same period last year. Revenue in the October to December period rose 16 percent, year over year, to $1.63 billion.

Annual revenue increased last to $5.44 billion, up 13 percent from 2010. But net income dropped to $53 million last year, down 60 percent.

NCR will release its first quarter financial report around April 30.

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Thursday, 16 February 2012 08:39 AM
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